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Europe ends higher
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November 16, 1999: 12:58 p.m. ET
Rate woes are swept aside, helped by early Dow rally and telecom, oil strength
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LONDON (CNNfn) - European markets finished on firm footing Tuesday, lifted by an early rally on Wall Street just hours before the U.S. Federal Reserve was set to deliver an anxiously awaited verdict on the next direction in interest rates.
Strength in energy and bank stocks and frenzied bid speculation in the telecom sector propelled London three-quarters of a percent higher to its 12th gain in 14 sessions. Frankfurt added almost 1 percent, while Paris ticked off a 13th straight record close, stretching a rally begun Oct. 28. Zurich scraped its way into the black.
A nearly 100-point rise on the Dow Jones industrial average helped shore up the fragile mood as traders debated whether the Fed will stand still on rates or enact a quarter-point increase to keep the U.S. economy from spiraling out of control. Most analysts believe European markets will be able to absorb the impact of a slight increase without major fallout.
A brewing cross-border takeover war kept investors' attention for the second day running, amid growing signs that Britain's Vodafone AirTouch (VOD) is about to launch a costly and possibly detrimental hostile bid for Germany's Mannesmann (FMMN), which spurned Vodafone's $106 billion takeover offer Sunday. Vodafone shares tumbled more than 7 percent, while Mannesmann advanced 2.3 percent, closing below the day's highs.
In London, the benchmark gauge, the FTSE 100, ended up 0.76 percent, or 49.4 points, at 6,583.0, despite a sharp dive in Vodafone, the index's second most heavily weighted stock.
Paris' CAC 40 climbed a quarter percent to 5,191.01. That was a whisker shy of the index's record intraday high of 5,199.11 set Monday. Blue chip volume was 2.29 billion euros.
In Frankfurt, the electronically traded Xetra Dax climbed 0.86 percent, or 50.23 points, to end at 5,909.52, buoyed by a 12-percent surge in steel and engineering firm Thyssen Krupp amid news it plans to take its steel division public in 2000 and pump up investment.
Zurich's SMI drifted up 3.4 points to 7,419.2, while Amsterdam shares ended up 0.73 percent at a record 604.11, lifted by a 2.8 percent gain in Royal Dutch as oil prices hovered around 34-month highs.
The FTSE Eurotop 300, a pan-European index that gauges the overall regional mood, ended up 0.64 percent at 1,420.66.
In currency markets, the euro probed session lows against the dollar just above the $1.03 level, though dealers said they expect the currency will find support around Friday's low of $1.0285. The euro was quoted at 109.15 yen in late trade.
In London, the brunt of attention remained riveted throughout the session on Vodafone, whose announcement of plans to launch a hostile bid for Mannesmann by Friday all but overshadowed the company's unveiling during the session of record first-half pretax profits. Vodafone shares tumbled 7.2 percent on heavy volume of 346 million shares.
A handful of other large blue chips contributed more than 50 points to the overall advance on the broader FTSE index. Oil major BP Amoco [LSE:BP.A] rose 3.9 percent and Shell (SHEL) gained 3.5 percent as crude oil prices hovered near 34-month highs. Benchmark Brent crude recouped some early losses Tuesday to quote around $24.48 a barrel in London, well above the session low of $24.16, pulled higher by firming U.S. crude light futures on the NYMEX exchange.
In the bank sector, the outperformers of the day were HSBC Holdings (HSBA), which advanced 4.5 percent, and Standard Chartered (STAN), which added 4.75 percent.
Select telecom stocks hitched their rallies to the general consolidation talk sweeping the sector. Orange (ORA), the target of a $36 billion friendly takeover by Mannesmann, closed up 1.5 percent as investors bet that a rival bid might yet emerge for the U.K.'s No. 3 cellular network operator.
In Frankfurt, ThyssenKrupp (FTHY) soared 12 percent, closing off its highs, after announcing a major restructuring aimed at tripling pretax income in the "medium term."
In the chemical sector, Bayer (FBAY) gained 3 percent after announcing plans to develop its core polymers business via a $2.45 billion acquisition in the United states. The company announced the purchase after warning that its full-year operating profit will trail 1998.
In Paris, France Telecom (PFTE) gave up 1.85 percent as the stock ran into profit taking. Diversified utility Vivendi (PEX), which also has a big telecom unit, finished just over 1 percent higher after it reported a 27 percent rise in nine-month revenue to 28.5 billion euros ($29.4 billion).
Spain's dominant telephone carrier, Telefónica, managed a 0.3 percent gain after posting slightly weaker-than-expected nine-month results, reversing earlier losses that followed a meteoric advance in the company's stock over the past three weeks amid excitement over the upcoming public sale of its telecom unit, Terra Networks. 
-- from staff and wire reports
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